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Market Study on the BioenergySector in China
General Presentation
30.6.2010
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Contents
2
Introduction
Market and policy summary
Overview of selected technologies
Gasification
Distributed energy and on-site power
Re-cycled fuels
Biocarbon
Biogas
Biomass power generation
Liquid bio-fuels: bio-diesel and bio-ethanol
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Introduction
3
The main objective of the study is to identify the actual andconcrete business opportunities for Finnish companies in thebioenergy sector in China.
Special focus is on the technologies and expertise available inFinland. Focus areas selected together with Finnishcompanies
The study has been ordered by Finnish Environmental Clusterfor China (FECC), and carried out by Gaia Network Oy
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Market and policy summary
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Biomass resources in China
Experts estimate that there are 460 million tons of agricultural and forest residue thatcan be used as energy in China. It equals to 242 million tons of standard coal. Strawsaccount for 240 million tons, agricultural processing residue 60 million tons and forestresources 160 million tons.
Straw from agricultural production is mainly from Hebei, Inner Mongolia, Liaoning, Jilin,
Heilongjiang, Jiangsu, Henan, Shandong, Hubei, Hunan, Jiangxi, Anhui, Sichuan, Yunnanand etc.
Forest resources are mainly from Heilongjiang, Inner Mongolia, Jilin, Yunnan, Sichuan,Tibet and etc.
Illustration of geographical distribution with a map. See next slide
5
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Geographical distribution of resources
6
Agricultural
residue
Forest
residue
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Goals for biomass energy developmentEleventh Five Years Plan (2005-2010)
During the Eleventh Five Years Plan (2005-2010), we accelerate thedevelopment of biomass energy, increase the development and use ofrenewable energy in rural areas and gradually expand the share of renewableenergy in energy supply. In this way, we can pave the way for larger use anddevelopment of renewable energy.
Developing technologies and launching pilots are the first stage and we willactively promote biomass power generation.
In 2010, renewable energy accounts for 10% of energy consumption. Annualconsumption of renewable energy in this country will be equivalent to 300million tons of standard coal.
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National policyFeed-in tariff (1/2)
Trial Measures for Administrating Feed-in Tariff and Other Charges ofPower Generated from Renewable Energy (NDRC, 4.1.2006)
Feed-in tariff approximately 30 /MWh (0.25 Yuan /kWh)
Power generation program will enjoy the tariff for 15 years since itstarts production
Starting from 2010, the newly approved programs will have an annual2% reduction in subsidy compared with that of the previous year
In a power generation program using mixed sources of energy, morethan 80% has to be from renewable sources to qualify
81 Yuan = 0,1206 (30.6.2010)
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National policyFeed-in tariff (2/2)
0.25 Yuan/kWh is the subsidy to biomass power generation projects on top of the basicprice. The basic price is the on-grid price of the local desulfurization coal-fired unit.Different places, different power plants, the on-grid prices are different.
Generally, on-grid prices of coal-fired units in different regions are:
North China: 40-48 /MWhNortheast China: 36-45/MWh
East China: 49-58 /MWh
Guangdong province: 57-52 /MWh
Central China: 47-48 /MWh
Northwest China: 34-43 /MWhSouthwest China: 35-53 /MWh
Measures for Administrating Feed-in Tariff and Other Charges of Power Generatedfrom Renewable Energy (NDRC, 4.1.2006)
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National policyGuarantee for grid connection
National energy company should purchase all the power generated fromrenewable energy programs that have been approved by the state.
If the gas and heat generated from renewable energy programs can meet thestandards of gas and heating companies, they should be connected to the grid.
If denied, any financial loss shall be compensated by the energy company, orthe fine will be doubled.
Programs that have been approved before Dec. 31st, 2005 will follow old rules.
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Bioenergy policies (I)
11
Policy Date Issued Details
Amendments to Renewable
Energy Law2010.4.1
Establish standalone systems in the network uncovered area
Take advantage of clean and efficient bioenergy fuel
Subsidize the additional cost of electricity from renewable
energy nation-wide
Tax incentives and funding support with discounted loans
through financial organizations for listed renewable items
Notice on Renewable Energy
Price Subsidies and Quota
Trading Notification Program
(by National Development
and Reform Commission,
State Electricity Regulatory
Commission)
2009.12.27
Additional subsidies for public renewable standalone power
systems; subsidies formulated by provincial price authorities
The additional subsidies cover operating and maintenance
costs of standalone power systems, renewable energy-based
electricity generation projects, etc.
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Bioenergy policies (II)
12
Policy Date Issued Details
Promoting policy to speed up
the development of bio-
industry
(by State Council)
2009
Target of the policy is to guide technology, human resources,
capital and other resources to the biotechnology industry
cluster. It promotes biotechnology innovation and
industrialization, and helps to establish the comprehensive
system for market-oriented, and combination of research in
industrial technology.
The policy promotes the cooperation of multinationalcompanies large-scale biological projects but also
encourages small and medium size biotechnology companies
with independent intellectual property rights.
Circular Economy Promotion
Law
2009.1.1
Encourage international cooperation in circular economy
Full purchasing of grid electricity generated by overall
utilization enterprises
Improve the comprehensive utilization rate of wood forforestry companies and sludge for related enterprises
Energy-saving projects given priority in financial support
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Bioenergy policies (III)
13
Policy Date Issued Details
Notice on Comprehensive
Utilization of Resource and
Other Product VAT Policy
2008.7.1
Power generation enterprises (especially large ones) shall
invest in renewable energy-based electricity generation
projects
Renewable Energy
International Cooperation
Plan (Ministry of Technology
and NDRC, 2007)
2007
Target of the plan is to strengthen the cooperation betweenChina and other countries in the field of science and applied
technology of renewable energy technologies
Focus areas include biomass fuels and biomass power
generation (non-food energy crops, ethanol from cellulose
materials, energy, forestry, bio-diesel, biomass briquette and
biomass gasification, power generation, etc.
Chinas Energy Condition andPolicy
2007.12 Encourages foreign investment in renewable energy powergeneration projects with unit capacity over 600,000 kW
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Bioenergy policies (IV)
14
Policy Date Issued Details
The Middle and Long Term
Renewable Energy
Development Plan
2007.8
Focus on bio-ethanol and biodiesel development
Establish biomass power plant in area s with forests
Financial funding for the implementation of the Renewable
Energy Law
Renewable Energy Law 2006.1.1 Encourage multiple parties to participate in developing and
using renewable energy
Pilot Scheme for Sharing
Renewable Energy Prices
and Costs
2006.1.1
Subsidies for on-grid electricity prices of 30 /MWh
Subsidized for 15 years
Starting 2010, subsidies to newly established power projects
will decrease by 2% per year
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Bioenergy market overview (1/2)
15
Customers include governments, private companies and state-owned enterprisescompetitors can also often be customers
Private companies often engage in bioenergy projects using own technology, yet theyare sometimes willing to purchase more advanced technology from competitors
Large utilities (e.g. big 5 electricity companies) normally purchase technology andequipment from other providers, rather than develop themselves
Most bioenergy sectors studied are still in initial stages of development in China;gasification & standalone power projects and biogas are among more prevalent
Few concrete projects (excluding biogas) announced or planned, but substantial interest inpotential projects
Most projects currently still not profitable due to high production costs (e.g. raw materialpelletizing & transport), immature supporting technologies, and lack of carbon tax
Customer &Competitor
Analysis
Feed-in tariff for on-Grid Electricity; guaranteed purchase of all electricity generated
Tax Breaks VAT rebate and income tax exemption to project owners; tariff and VATexemption for imported equipment used for domestic renewable energy
Discounted Loans < 3% interest for 1-3 years; provided by central government throughChina Development Bankand other commercial banks
Government
Policy Support
BioenergyProjects
1) RE = Renewable Energy
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Bioenergy market overview (2/2)
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Central and local governments generally encourage bioenergy development
Several national regulations affect bioenergy, such as The Amendment of Renewable EnergyLaw(2010) and The Middle and Long Term Renewable Energy Development Plan (2007)
Local governments generally follow the central governments lead in adapting the samepolicies & regulations, Shanghai has clearest and most specific policies compared withother areas, e.g. 120 /kW subsidy to Distributed Energy (DE) projects
To prevent competition for resources, each urban district / rural county can generally only
have one bioenergy project / programme invested
Regulations
Opportunities for Finnish players differ by sector
Some Finnish technologies are perceived as too advanced for China market
Need for educating potential customers
Project owners generally open to discussing cooperation, even if they already employ
proprietary technology
Opportunities &
Challenges
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Indicative electricity prices in regions
17
Appendix
Region Residents Common
industrial and
commercial
Large industries Small and
medium
fertilizer
production
Agricultural
use
North China 50.8-66.2 65.1-101.9 52.3-84.9 32.3-45.8 45.4-75.9
Northeast
China
54.2-63.5 87.6-109.3 56.0-68.7 40.4-50.8 48.3-56.0
East China 54.0-68.1 98.5-110.1 67.0-80.2 26.9-33.2 54.0-83.0
Central
China
67.8-72.6 97.4-120.4 59.3-74.0 32.7-48.3 44.2-84.7
Guangdong
province
73.4 110.7 80.2 73.7
Northwest
China
53.4-61.7 74.6-97.3 40.3-62.6 22.6-36.1 37.2-55.5
Southwest
China
61.7-63.2 96.6-102.0 63.7-72.7 30.4-43.1 56.5-64.2
/MWh
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Natural gas priceBeijing
18
/m3
Appendix
Usage Price
Industry 0.284
Residential use 0.248
Public service 0.309
Heating 0.236
Cooling 0.224
CHP 0.188
Compressed natural gas(CNG)
Mother-staion 0.230
Son-station 0.309
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Natural gas priceShanghai
19
/m3
Appendix
Category of users Price
Grid company directly
supply to industrial users
CHP 0.221
Natural gas power
generation
0.234
Chemistry industry zone 0.264
City gas company supply to
industrial users
> 5 million m3 0.363
1,2 million m3 - 5 million m3 0.424
< 1,2 million m3 0.460
Natural gas as vehicle fuelCNG 0.433
Residential users 0.303
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Example of non-governmental power producer (1/2)
Dairy demo farm
Mengniu Australia International Dairy Demo Farm, biogas power
generation and comprehensive utilization project
Cow manure resource: manure from 10 000 cows 280t/d, urine
and flushing water 360 t/d
Project scale: 4 biogas digesters with volume 2500m3, installed
power generation capacity 1.25MW
Designed biogas production: 4 million m3/year
Designed power generation: 8 GWh/year
Ownership: Mengniu Biomass Co., Ltd.
Technology: CHP. Biogas fermentation technology: CSTR. Mixer(stirring machine), biogas composition analyzer, tank material of
the biogas digester, tank-body construction of the biogas digester,
are all German products and technologies.
20
Appendix
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Example of non-governmental power producer (2/2)
Chicken manure biogas
Chicken manure biogas power generation project, Beijing DQY
Agriculture Technology CO. Ltd.
Chicken manure resource: 212t/d, TS 30%
Project scale: 4 biogas digesters with 3000m3, installed power
generation capacity 2MW
Designed biogas production: 7 million m3/year
Designed power generation: 14 GWh/year
Ownership: Beijing DQY Agriculture Technology Co. Ltd;
Technology: CHP. Biogas fermentation technology: CSTR. Mixer
(stirring machine), biogas composition analyzer, tank of the biogasdigester are German technology and products; biogas power
generator is Austrian product.
21
Appendix
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Overview of Selected Technologies
Gasification
Distributed Energy and On-site Power
Re-cycled FuelsBiocarbon
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Mainly use downdraft furnace; key raw materials straw, corn cob, and wood residues toeither generate power or gas
Typically small ,with
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If Finnish technologies are more advanced, we will of course welcome their
technologies Project owner of gasification project
We are very eager to cooperate with Finnish technology companies and are
especially interested in gasification technology (but not pelletizing equipment)
China already has some good equipment companies. I can suggest two ways for
Finnish companies to enter China: Cooperate with local technology players and outsource equipment production to them, or
set up a JV to output technology together and sell it using the domestic partners network
Invest in gas management & distribution, which will be an emerging trend
Project owner of municipal gasification project
Bioenergy is a very new industry in China and few companies can afford the costIknow little about Finnish companies, but they should have more advanced
technologies and should have opportunities in China
Project owner of a gasification project
Selected Quotes from Industry Players
24
O i f Di ib d E P j
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Standalone power technologies are widely used in Chinese Distributed Energy (DE)Projects, which are concentrated in urban areas (located near the main national naturalgas pipeline) such as Beijing &Shanghai
The main fuel source for these projects is natural gas, and the main technologiesapplied are natural gas engines and/or micro turbines
Potential
Partners
Competitors
Existing DE
Projects
Most funding support is in the form of municipal subsidies providing favorablenatural gas prices
Finnish technologies are generally welcome
Framework &
Energy Policies
Overview of Distributed Energy Projects
in China
Few local technology competitors; however local equipment suppliers enjoy priceadvantages (~1/3 price of imported equipment)
Foreign competitors including Capstone, GE, Cummins, Caterpillar, Ingersoll Rand,Siemens, Mitsubishi, and Yanmar
Chinese DE companies are possible local partners, as they participate in theinstallation of pilot projects, project bidding, and importing equipment
Fuel cell technology is still relatively new in China, the most likely initial partners areresearch centers or institutes
Shanghai municipality is the most active area for DE projects
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The market potential for DE systems is large; however, the market is not wellestablished. Thats why we are planning to launch a promotion programme in the
second half of 2010.
Secretary General at an Energy Conservation Organization
I suggest foreign companies build a pilot project to show us the efficiency and
effectiveness of their technology. This is the best type of advertisement.DE Specialist at a Shanghai Government Commission
Now is the best time for Finnish SOFC to enter China, as the Chinese technology is
under developed and other foreign SOFC technologies have not really entered the
Chinese market.
SOFC Project Leader at a Leading Chinese Research Institute
Selected Quotes from Industry Players
26
O i f R l d F l P j i
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Customers &
Competitors
Framework &
Energy Policies
Existing REF
Projects
Little interest for incinerating / boiling sludge or industrial waste; most recycled fuelprojects use direct combustion of household garbage, straws and forest residues
After sorting, only leftover garbage/waste with low fuel value arrives at incinerationplants for treatment & power generation; imported equipment is often not suitable
Geography: incineration projects concentrated in developed eastern coastal areas,including Jiangsu, Zhejiang and Guangdong provinces
Possible local partners : DYNA Green , Wuhan Kaidi, and large state electricitycompanies, who normally buy technology from other companies
Key competitors : both domestic ones such as DYNA Green and Wuhan Kaidiandforeign ones such asAlstom and BWE
Similar to other bioenergy projects, incineration projects can receive on-grid electricitysubsidies and garbage incineration subsidies, which vary according to specific area
Local governments still encourage imported technologies (although domesticincineration & boiling technology are already seen as competitive)
Foreign RDF technology & equipments may need to be adjusted to
adopt Chinas raw materials
Overview of Recycled Fuel Projects in
China
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Chinas bioenergy market is still developing, and all the projects are still losing money . In the same
county, only one bioenergy project/programme is permitted to prevent competition for resources
a project owner of incineration project
Denmark has the best biomass power generation technology; Finnish technologies are second or
third level in the worldMy suggestions to Finnish companies:
Location: as Finnish technologies are strong in wood /forest residues, they can be introduced
to the areas of China with rich wood/forest resources
Adjust strategy: As Finnish technology is not the best, Finnish companies need to be clearabout their own ability and adjust entry strategy if necessary
Investment: Finnish companies can also enter into China through project investments
a project owner of incineration project
Our tech expert thinks RDF has few opportunities in China as Chinese garbage is quite different
from foreign countrieshigh fuel value garbage (e.g. board & paper) used to make transportable
RDF has already been selected out by cleaners for other purposes before it is sent to us
a project owner of incineration project
Selected Quotes from Industry Players
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BBQ / Fuel
Chemicals & mining
Medical
Water & food treatment
Biocarbon fuel (uncommon)
Charcoal
Fertilizer (soil conditioner)
Activated carbon
Wood remainders
Fresh bamboo /
bamboo remainders
Fruit shell (mainly coconut)
Overview of Biocarbon Market in China
Wood remainders & coconut shells are most commonly used raw material
Charcoal & activated carbon (for water purification) are most used biocarbon products
Biocarbon fuel is still new product to the China market and is not frequently used
Few pure tech providers most also produce biocarbon products; mainly specialize in 1 type
Thousands of decentralized small players; some concentrations of active carbon producers in
Henan province and charcoal producers in Henan, Shandong, and Hebei provinces Specific standards exist for almost all aspects of active carbon commercialization
29
China Biocarbon industry still focused on lower-quality products
(e.g. charcoal); advanced higher-quality products are imported
Common Raw
Materials
Biocarbon
Products
Common
Applications
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Biocarbon Market Potential Estimate
30
While largest potential markets are for biocarbon fuel and charcoal,
this depends on Finnish firms ability to capture market share
Biocarbon Product Potential MarketEst. Market Value
(2009)
Biocarbon Fuel Thermal Coal (for fuel) USD 168-172billion
Charcoal Charcoal (for BBQ)USD 26-31
billion
Soil Amendment Nitrogen FertilizerUSD 4-6
billion
Active Carbon
Mainly higher-end active
carbon imports used in:
Chemicals & mining
Medical
Water Treatment
USD 51-60
million
Note: While China has nearly 1500 active carbon producers, most produce low quality/price
active carbon; higher-quality/priced active carbon is commonly imported
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Notes on Biocarbon Market Potential
Estimate
31
Estimated market potential for biocarbon fuel, charcoal, and soil amendment
determined through known demand for their main potential / substitute products
For active carbon, assumed Finnish players focus on types of active carbon that yield
highest price per ton, which in China are higher-quality active carbon used mainly in:
Chemicals & mining Medical
Waste Treatment
As this higher-quality active carbon is commonly imported, active carbon imports in
2009 are used as the potential market in this estimation
All data is estimated from analysis of multiple sources, including secondary research
and primary interviews with industry players, research centers, etc.
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Common Assertion: Our core tech in manufacturing *fertilizer+ is the top in this field
in China!- Senior tech engineer at Fertilizer Producer
Most Chinese companies exporting active carbon products are exporting low-level
products and importing more advanced products, like active carbon used for gold
extraction or medicine
-Researcher at Active Carbon association
Biocarbon fuel is not common in China, since production costs are much higher
than for traditional fuel, and producers would not sell at a loss. While charcoal can
also be used as an industrial fuel, in reality it is almost never used. It is mainly used
for BBQ.
- Industry expert at Charcoal manufacturer
Selected Quotes from Industry Players
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Biogas
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Biogas objectives in Chinese energy policy
Agro biogas project are an important part of the Government NewCountryside policy
Multi-benefit projects creating economic, social and biological benefits
Farms and neighboring households are provided with clean energy
Slurry and residues are utilized to develop eco-agriculture andpollution-free farm products
Animal wastes discharge according to laws and regulations
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Investment subsidies
Central government subsidies
Western region: 45% of total investment, total subsidy
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Provincial goals of biogas production
Southern part of coastalareas (Guangdong, Zhejiang,
Shanghai, Jiangsu etc.)
Reduce the pollution fromanimal farms and recover
energy Biogas is used for power
generation or as fuel gas
Slurry is discharged aftertreatment (having reachedthe discharge standard)
Other southern areas(Sichuan, Hunan, Hubei,
Anhui etc.)
Reduce the pollution fromanimal farms and recover
energy Biogas is used as fuel gas
or power generation
The digestate are first usedas fertilizer in agriculturalproduction. Excess isdischarged after treatment
(having reached thedischarge standard)
Northern areas (Shandong,Hebei, Henan, Shaanxi,
Shanxi etc.)
Reduce the pollution fromanimal farms and recover
energy Biogas is used as fuel gas
or power generation
The digestate are first usedas fertilizer
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Sizes of biogas plants
New standard Production of biogas per day
Large scale: 400-19903/
Medium scale: 150-4003/
Small scale: < 1503/
Old standard
37
Size Total
Volume (m3)
Volume of single
tank (m3)
Biogas
production
(m3/d)
Large 1000 300 300
Medium 100-1000 50-300 50
Small 50-100 20-50 20
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Animal farm biogas projectsPlan 2006-2010
38
Distribution
By the end of 2005 Newly-built in 2006-2010 By the end of 2010
Large-and-
medium-sized
animal farms
Large-and-
medium-sized
biogas projects
Newly-built
large-and-
medium-sized
biogas projects
Large-and-
medium-sized
biogas projects
Percentage in current
large-and-medium-
sized animal farms (%)
Total 11952 700 4000 4700 39.32
Westernregion
Total 1541 65 390 455 29.53
southwest 852 56 180 236 27.70
Northwest 689 9 210 219 31.79
Central
and
northeaste
rn region
Total 5437 292 1560 1852 34.06
Hilly area in
southeast1522 169 320 489 32.13
Plain area near
Yellow Sea and
Huai Sea
2313 93 700 793 34.28
Northeast 1602 30 540 570 35.58
Eastern region 4974 343 2050 2393 48.11
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Realised projects and output 2008 (1/3)
39
Province Large biogas plant Medium biogas plant Small biogas plant
Num
ber
Total
volume
of
digester
(104m3)
Annually
biogas
production
(104m3/a)
Number Total
volume of
digester
(104m3)
Annually
biogas
production
(104m3/a)
Number Total volume
of digester
(104m3)
Annually
biogas
production
(104m3/a)
Beijiang 70 4.4144 1267.848 41 0.820 585.1 17 0.098 5.230
Tianjin 5 0.220 45.500 71 0.400 19.300 40 0.145 5.620
Hebei 38 2.451 425.665 742 9.875 788.506 532 1.662 208.233
Shanxi 88 4.034 1543.390 11 0.058 2.032 185 117.0 0.654
Neimeng 9 2.035 636.600 10 0.140 27.711 7 0.073 2.220
Liaoning 253 9.521 451.186 33 0.782 39.983 14 0.044 5.433
Jilin 0 0 0 0 0 0 13 0.052 20.000
Heilongjiang 22 1.070 390.55 5 0.120 43.800 152 0.760 91.200
Shanghai 0 0 0 0 0 0 0 0 0
Jiangshu 88 6.120 1087.983 529 10.888 992.119 421 1.909 139.321
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Realised projects and output 2008 (2/3)
40
Province Large biogas plant Medium biogas plant Small biogas plant
Num
ber
Total
volume
of digester
(104m3)
Annually
biogas
production
(104m3/a)
Number Total
volume
of digester
(104m3)
Annually
biogas
production
(104m3/a)
Number Total volume
of digester
(104m3)
Annually
biogas
production
(104m3/a)
Zhejiang 292 15.116 1360.230 4146 53.371 4894.360 3508 12.142 1103.932
Anhui 17 1.792 209.609 171 1.750 119.802 324 2.186 101.728
Fujian 405 25.303 3217.887 651 9.415 988.887 4037 23.810 1017.417
Jiangxi 53 9.95 1016.38 440 9.68 989.30 1374 5.32 543.70
Sandong 105 12.512 4336.870 406 4.137 396.738 966 5.266 341.600
Henan 286 17.824 2239.800 1500 17.137 1347.209 1677 5.287 308.486
Hubei 22 1.150 209.875 135 2.395 307.658 315 1.385 159.483
Hulan 45 2.771 373.854 1072 8.987 929.266 6930 18.564 1632.371
Guangdong 225 20.005 1986.815 248 9.56 2174.84 459 1.920 174.270
Guangxi 27 0.554 48.435 421 4.822 493.080 907 3.250 336.673
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Realised projects and output 2008 (3/3)
41
Province Large biogas plant Medium biogas plant Small biogas plant
Num
ber
Total
volume
of digester
(104m3)
Annually
biogas
production
(104m3/a)
Number Total
volume
of digester
(104m3)
Annually
biogas
production
(104m3/a)
Number Total volume
of digester
(104m3)
Annually
biogas
production
(104m3/a)
Hailan 187 10.285 3003.200 124 0.954 81.230 160 0.812 115.621
Chongqing 53 3.688 114.569 507 6.504 355.876 624 2.397 99.570
sichuan 326 25.852 2901.920 1375 24.511 2229.328 789 3.497 338.189
Guizhou 4 0.180 19.440 82 0.912 54.720 132 0.679 40.764
Yunlan 2 0.300 16.875 14 0.335 37.600 36 0.157 37.365
Xizang 0 0.000 0.000 0 0.000 0.000 0 0.000 0.000
Shanxi 3 0.180 27.000 72 1.440 180.000 71 0.355 42.600
Ganshu 5 0.485 24.500 27 0.270 76.650 58 0.175 53.126
Qinghai 0 000.0 0.000 0 0.000 0.000 0 0.000 0.000
Ningxia 29 0.870 317.550 29 0.435 78.300 125 0.570 51.300
Xinjiang 2 0.120 0.720 2 0.040 0.120 12 0.060 3.600
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Current activity and plans for animal farm
biogas plants
2008
Total39.510operational
plants Large 2.761
Medium12.864
Small
23.885
2009
1600 newplants
2010
Estimation:1.000 newplants
2011-2015
Rural
BiogasPlan
Masterplan
Beingprepared
Target to
build 7.500new plants
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Case Sichuan
Biogas policy in Sichuan
Sichuan provincial policy aligns with national policies
In 2006, Sichuan Peoples Provincial government launched Decisions
of Sichuan Peoples Provincial Government on Accelerating RuralBiogas Construction (Chuan Gov. *2006+ No. 7)
In 2007, Sichuan Government issued Management Measures of Rural
Energy Construction (Order of Sichuan Gov. No. 163)
In 2009, Sichuan Development and Reform Committee and AgricultureAdministration published Management Measures of Large and
Medium-Sized Biogas Projects on Animal Farms
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Case Sichuan
Biogas activity
Status June 20094.545 million household biogas digesters
1 701 large and medium-sized biogas plants
58 725 biogas septic tanks for sewage treatment
2009
60 newly built large and medium-sized biogas plants
2010
Estimated 30 newly built large and medium-sized biogas plants
Plan 2009-2015
8512 new large and medium-sized biogas plants on animal farmsLarge 1692
Medium 6820
Total estimated investment 1,2 billion
Central government applied for investment subsidy equaling 45% of the total investment
Local government ready to invest 5% of the total investment44
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Case Sichuan
Market environment
Customer potential
Sichuan has about 10,000 large and medium-sized animal farms
Size of government funding defines number of the villages building biogas projects utilisingstraw.
In 2009, there were 50 such projects around China with 2 in Sichuan
Raw material availability250 million tons of animal waste and washing water per year
50 million of straws per year
Qualification system on medium and large scale biogas plants
Institution submitting a feasibility study should have at least second grade consulting
qualification on agricultural or environmental projects Institution providing preliminary design and shop drawing should have at least second grade
consulting qualification on agricultural or environmental projects
Institution constructing a plant should have at least third grade construction qualification onenvironmental projects
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Case Sichuan
Competition situation
Major consultants and designers of biogas plants
Chengdu Energy and Environment Project Design Institute of Ministry of Agriculture
Hangzhou Energy and Environment Project Co. Ltd.
Qingdao Tianren Environmental Project Co. Ltd.
Beijing Municipal Research Institute of Environmental Protection.
Major construction companies of biogas plants
Qingdao Tianren Environmental Project Co. Ltd.
Sichuan Mengte Project Construction Co. Ltd.
Hangzhou Energy and Environment Project Co. Ltd.
Chengdu Tongde Tianren Environmental Project Co. Ltd.
Additionally there are another 360 companies with annual revenue of over2 million RMB (0,24 M) engaged in environmental protection projects
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Biogas plant types
Rural area plants
Reducing pollution from animal farms
Recovering energy and utilize resources
Agro biomass plants
Recovering energy
Collecting biogas for farmers
Municipal plants
Reducing quantity of sludge
Recovering energy
Industrial plants
Reducing pollutants
Recovering energy
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Biogas related power generation
technologies
Gas engines
Biogas power generation mainly by internal-combustion engine
Manufactures include: Jinan Diseal Engine Co. Ltd., Shengli Power EquipmentGroup of Shengli Oil Field, Nantong Hehai Power Equipment Co. Lte., NantongBaoju Gas Engine Co. Lte., Kangda Mechanical and Electrical Co. Lte.
Microturbines
Currently not used in China
Price is the key issue. If the price can compete with Chinese gas engines andgood after-sales and maintenance service can be provided, the marketopportunity is large
Fuel cells
New technology still in research stage
When the technology is mature and the price is reasonable, there will besizeable business opportunities
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Technology option - upgrade to vehicle use
China is investigating the technologies and equipments for upgrading thebiogas for vehicle use
Southwest Chemical Industry Reasearch Institute and Chengdu YalianScience and Technology Co. Ltd have developed an upgrade technology
Henan Zhenyuan Group plans to build a biogas project for vehicle usewith daily production of 2000m3
Finland has the relatively mature technologies and equipments for
Middle scale biogas project upgrading system
Vehicle gas charging equipments
If these technologies and equipments priced competitively, they can gain market sharein middle and large scale biogas plants
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Biogas plant design and construction
The design and construction of biogas plants is a very tough business for Finnish companies
China has long experience of designing and building biogas plants at a relatively low cost
Finland lacks the image of Germany, Denmark and Sweden as the forerunners of biogas
technology in the mind of Chinese officials, biogas project designers and researchers
Biogas projects are not necessarily profitable in energy terms. The purpose of biogas plantsis to reduce pollutants and fulfill regulatory requirements
The utilization of biogas is the second purpose => owners reluctant to invest more than a minimum
Even though highly developed, project owners will not choose foreign technology and equipment if prices are threetimes than Chinese products
Future outlook
Biogas plant owners and biogas research engineers are appealing to the government for increasing the gridelectricity price and decreasing the up-grid barrier
If successful, will help profitability of even small scale biogas plants
With the government emphasis on promoting green energy, the situation of non-profitable biogas plants may changein near future
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Biomass power generation
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Goals for biomass power generation
According to the demands of social and economic development and availabletechnologies, biomass power generation will be a key area for development inrenewable energy
General goal for biomass power generation
5.5 GW in 2010
Including 4 GW generated from agricultural and forest biomass
30 GW in 2020.
Detailed goals for different biomass by 2010
3 GW for agricultural biomass power generation
1 GW for forest biomass
Agricultural + forest together in 2020: 24 GW
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Goals in geographic perspective
Grain production areas (Henan, Shandong, Heilongjiang, Jiangsu etc.)
Building biomass power plants using straw as the materials or transforming small coalpower plants to use straw
Forest and bush areas (Inner Mongolia, Jiangsu, Heilongjiang etc.)
Building biomass power plants using rice hull and residue from bush and forest processingas materials in large and medium-sized agricultural processing enterprises
Areas suitable for forest growing and biomass power generation (Sichuan,Inner Mongolia etc.)
Planting energy forest on the wasteland
Jiangsu Province
Planned to develop biomass power generation of 500 MW from agricultural and forestresidue in 2010
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Subsidies for biomass power generation
Total investment needed from 2006 to 2020 is 200 billion Yuan
New increased installed capacity of 28 GW in biomass power generation
If investment is 850 /kW, total investment will be 24 billion .
Guidelines for Applying for Special Fund of Environment Protection ProgramsFin No.[2006]318)
Fund allocation and subsidizing loan interests
Programs enjoy subsidizing loan interests max. three years
During the period of carrying out the program, the actual paid interests will be totally or partiallysubsidized.
The subsidy starts from June 21 of last year to June 20 of this year (2010).
Notice of Preferential Policies for Enterprise Income TaxFin [94]001)
Three years of income tax can be exempted. Not implemented at the moment.
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Status of biomass power generation
By 2006, there were 50 biomass power generation programs that had been approvedby the National and Provincial Development and Reform Commission, with totalinstalled capacity of 1.5 GW.
In 2006, totally 39 biomass power generation programs, with installed capacity of 1.28GW, have been approved.
By the end of 2006, 34 programs were under construction, locating in Henan, Jilin,Shandong, Jiangsu, Heilongjiang, Liaoning, Xinjiang and etc.
Currently, 82 direct fired power generation programs have been approved of whichmore than 40 are under construction, locating mainly in Jiangsu, Anhui, Jilin,
Heilongjiang, Inner Mongolia and etc.
Development of technologies for utilizing and developing biomass energy has beenaccelerated. Today China has available technologies for agricultural and forest biomasspower generation and have laid the solid foundation to scale up the programs.
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Status of national demonstration programs
Direct fired power generation program in Shan County, Shandong
The first grid-connected biomass power generation program in China. On Dec. 1st,2006, it finished construction and was connected to the grid. The technology wasintroduced from Denmark and equipment made in China. The total installed capacityis 25MW. Grey hard straw such as cotton straws and barks form the main rawmaterial.
Biomass power generation program in Jinzhou, Hebei
Started production in 2007. Huaguang Boiler Company developed water-coolingvibrating stoker boiler for biomass power generation. The total installed capacity is24MW. Main raw material is corn straw while cotton straws and branches of fruittrees can also be used.
Biomass power generation program in Rudong, Jiangsu
Started production in 2008 and has total investment of about 300 million Yuan. TheWorld Bank has granted loans for 20 million dollars this project. It adoptsinternationally advanced power generation technology of high temperature and highpressure combustion.
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Case Jiangsu
Status in Jiangsu provinceThe area of Jiangsu Province is 102,600 km2, accounting for 1.05% of the national total,
with population of more than 70 million. The province has the highest population densityin our country.
This is the major grain production area in China. The annual production of biomass strawsis 50 million tons.
In this province, there are 16 approved biomass power generation programs among which14 are direct fired, 1 is mix fired and 1 is gasification power generation.
11 programs have started production. In the northern part of Jiangsu, within the area of200 km as the diameter, there are 11 biomass power plants. In the city of Suqian, there arethree. In addition, there are more are under construction or have been approved.
Too many programs lead to the competition in material market and the soaring price. Priceof rice hull increased from 22 /ton to 56 /ton, straws from 23 /ton to 33 /ton, andbark from 28 /ton to 38 /ton.
There is one manufacturer of biomass power generation equipments, namely HuaguangBoiler Company. Its self-developed water-cooling vibrating stoker boiler has been used inproduction.
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Direct fired power generation
Technology
Straw is packed in the field and stored in various stations. It will be transported to power plant regularly,according to the arrangement of the plant.
Packed straw is smashed and put into the boiler directly.
The dust is from smoke which will reach the emission standards.
Vapor, produced from the boiler, drives the turbine and the generator.
Pretreatment of straw boiler is different from coal boiler.
Moisture content of the material is high, volatile matter is high, ash is low and the heat value is low.
There is more alkali metal in biomass than in coal. Ash melting point is low => in combustion, ashcumulates and forms sediment.
Alkali metal in flying ash and chlorine in smoke may erode the equipment.
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Direct fired power generation
Advantages and disadvantages
Advantages
This is a mature technology with numerous successful cases in other countries.
Straws are smashed and put into the boiler and do not need to be shaped intoany form.
It is suitable for large-scaled production
Disadvantages
Such technology and relevant equipment are not available in China and has to beintroduced from overseas => expensive
This technology is suitable for 20MW-50MW power generation. 2.5-4.5thousand tons / year of straws are deeded. The work of collecting straw has
many challenges and high cost. Large amount of investment will be needed in buying technology and therefore
the technology does not suit small-scaled power generation.
Straw pre-treatment equipment has low efficiency.
Accumulation of ash and residue => serious erosion is another challenge.59
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Direct fired power generation
Current status and programs
By 2008, there are more than 25 large biomass power generationprograms that have connected with the grid
The total installed capacity is 600 MW, with annual production of30*108 kWh and consumption of biomass of more than 400*104T
They are mainly located in Shandong, Jiangsu, Anhui, Hebei,Henan, Jilin, Heilongjiang and etc. Power generation from caneresidue is developed in southern area of China, such asGuangdong, Guangxi, Yunnan and etc.
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Direct fired power generation
Boiler companies
Purely straw burning boilers in preliminary stage of design
Wuxi Huaguang Boiler Company has developed a straw boiler and has
the full IPR for the technology. It has started production of the boilerin Hebei Jinzhou Straw Power Plant.
Jinan Boiler Company and some other domestic companies areproducing biomass boilers parts for foreign companies. Some foreigncompanies have assembly in China.
Domestic universities, research centers and equipmentmanufacturers are actively developing boilers and equipment for pre-retreatment of materials. Small-scaled experiment anddemonstration projects have been launched.
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Co-firing power generation
Technology
View from foreign experiments: when the weight ratio ofbiomass is less than 20%, biomass with high chlorine andhigh alkali will not lead to erosion, accumulation of ash orother harm to the boiler.
Fluidized bed is the best technology for co-firing of strawand coal
Suitable for most materials that are not easy to burn
Co firing power generation
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Co-firing power generation
Advantages and disadvantages
Advantages
Simple technology
Small investment
Disadvantages
There is no monitoring and measuring equipments to
identify the share of biomass used in power generation=> difficult to get into feed-in tariff scheme.
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Co-firing power generation
Current status and programs
Two large programs: Shandong Shiliquan PowerPlant Transform Program and Xiexin Baoying
Biomass Co-fired Program
Seven small thermal power plant mix the biomassmaterials, including straw, rice hull, bark, reed and
the mud in urban sewage treatment plant. Theyare all invested by HK Xiexin Group.
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Biomass gasification
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Biomass gasification
Technology
Gasification takes biomass as the material and air orvapor as the media. Through chemical reaction underhigh temperature, biomass is changed to be flammablegas, which have CO and H2 as the major content.
Flammable gas has impurity substances, mainly coketar, ash and small amount of alkali metal. Coke tar isthe substance affecting the normal function of
downstream equipment.
Biomass gasification
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Biomass gasification
Advantages and disadvantages
Advantages
CFB is currently the only gasification technology that has been used in large-scale power generation.
Technology has national intellectual property rights favorable to thedevelopment of straw power generation.
It is suitable for power plants of all sizes.
Straw does not need to be shaped before gasification.
Disadvantages
Too much ash in smoke leads to large amount of ash and residue in the coketar which has to be disposed.
Too much coke tar sewage to be disposed. Difficulty of disposal has increased.
The carbon content in residue is high and transformation efficiency is low.
The current biomass CFB power plant are all using rice hull and woodenpowder as materials. The problem of utilizing straw has not been addressed.
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Biomass gasification
Current status and programs
One large program, Gaoyou BiomassGasification Power Plant, 5.5MW
A number of gasification power plants locate inJiangsu, Fujian, Sanya Hainan, Handan Hebei,
Heilongjiang with the size smaller than 1MW.
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Types and origins of technologies
BWE from Denmark
Shandong Shan County Direct Fired Power Generation Program. The technology is introduced from Denmark byNational Bio Energy CO. Ltd. and the equipment is made in China.
Self-developed technology of circulating fluidized bed boiler
Jiangsu Suqian Direct Fired Power Generation Program. The technology is jointly developed by China Energy SavingInvestment Co. and Zhejiang University.
Self-developed water-cooling vibrating stoker boiler
Hebei Jinzhou Direct fired Power Generation Program. The boiler is developed by Huaguang Boiler Company.
Self-developed chain gate boiler
Henan Changge Thermal Power Plant. The technology is developed by Sifang Boiler Company of Shanghai ElectricGroup.
Self-developed CFB
Jiangsu Xinghua Gasification Power Generation Program. It is developed by Guangzhou Energy Research Institute.
Self-developed fixed bed gasification power generation technology
Jiangsu Gaoyou Gasification Power Generation Program. It is developed by Jiangsu Linyuan S&T co., East ChinaUniversity Of Science And Technology and Shenyang Gas & Heat Research and Design Institute of Ministry ofConstruction.
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Types of owners
National Bio Energy CO. Ltd.
Owns most of the direct fired power generation program.This company has broad cooperation at home and abroad. Ithas advanced technology and sufficient funding.
Local investment companies
They have sufficient funding and usually have relation withgovernment.
Private enterprises Few. They have difficulty in financing => are smaller and
mainly focus on gasification programs.
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Company profileNational Bio Energy Co. Ltd. (1/2)
Professional in developing and utilizing bioenergy. It benefits frominternationally advanced direct fired power generation technology and richbiomass resources in China.
The company invests in biomass power generation programs and expands tothe whole industrial chain, including producing and processing biomass fuels
and recycling ash.
The company was established on July 7th, 2005, registered capital 2 billionYuan (0,24 billion ).
The company currently has 40 programs, locating in Shandong, Hebei, Henan,Jiangsu, Heilongjiang, Jilin, Inner Mongolia, Xinjian, Hubei, Anhui, Shaanxi andetc.
Among those 19 have started production with installed capacity of 396MW. 9 programs are underconstruction with installed capacity of 282MW.
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Company profileNational Bio Energy Co. Ltd. (2/2)
The company invested in the first nationaldemonstration program of direct fired powergenerationShandong Shan County Direct FiredPower Generation Program. Equipment of 130 MWstarted production on Dec. 1st, 2007.
It also invested in Heilongjiang Wangkui Program
which is the first biomass power generation programusing corn straws as the main material. This programstarted production on Nov. 16th, 2007.
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Liquid biofuels:bio-diesel and bio-ethanol
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Bio-diesel raw material potential
Potential for planting suitable crops isapprox. 20 Mha.
Main crops:
sweet sorghum and Jatropha curcas ,
Pistacia chinensis Bung
Aluerites fordii Hemsl
Potential for bio-liquids 50M tons/a
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Bio-diesel objectives in Chinese energy policy (1/2)
According to its land resource and agriculturalproduction policies, China aims at breeding scientificenergy plants, constructing large-scale raw materialsupply base and cultivating large bio-liquid fuel
enterprises.
Current key focus area is to develop bio-dieselproduction technologies to utilize energy crops such as
Jatropha curcas , Pistacia chinensis Bunge, Alueritesfordii Hemsl, and cottonseed.
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Bio-diesel objectives in Chinese energy policy (2/2)
Also restaurant waste oil recycling system needs to beestablished gradually.
Biodiesel consumption is expected to reach 200 thousandtons by 2010 and 2 million tons by 2020 (Eleventh FiveYears Plan)
Series of biodiesel pilot projects will be constructed by2010 in Sichuan, Guizhou, Yunnan, and Hebei provinces.
Crops being used are Jatropha curcas , Pistacia chinensis Bunge andAluerites fordii Hemsl.
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Bio-diesel market status (1/2)
Currently biodiesel produced is used mainly for vehicles.There is no official standard, but B5 is suggested andsubmitted to the government for approval.
Annual capacity for Bio-diesel production based onrestaurant waste oil, tank settlings from oil plants, oilplants reached 50.000 tons a year
Altogether the biodiesel production is only hundreds ofthousands of ton/a, due to limited availability of rawmaterials
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Bio-diesel market status (2/2)
A small part of the products are sold to biomasspower plants as fuel
About 20 market actors and all of them are small scaleand no one can dominate the market trend
Most of market actors are private enterprises. Twomajor players are Longyan Zhouyue company andGushan Company
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Bio-ethanol objectives
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Bio ethanol objectives
under Chinese energy policy
Consumption targets (non-food based bio-ethanol)
2 million tons by 2010
10 million tons by 2020
Currently raw materials used for ethanol is mainly food-based(corn, wheat), potato (cassava and sweet potato), sweetsorghum stem, sugar cane and agricultural straw, etc.
Target is to limit usage of raw materials competing with foodproduction
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Bio-ethanol raw materials targeted
Sweet sorghum stem
In areas of rich resource of low-quality land (north-east and Shandong province)
Potato-based ethanol
In areas with large scale potato plantation (Guangxi, Chongqi and Sichuan, etc.)
Quercus (rich starch content)
Inner Mongolia, Jilin, Heilongjiang, Hubei, Jiangxi provinces
Facilitates the bio-ethanol project development of big state enterprises in thearea
Cellulosic biomass (such as agricultural straw)
Test production is being developed
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Development of bio ethanol
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Development of bio-ethanolNational pilot projects (1/2)
In April 2001, 4 pilot projects approved:
Jilin ethanol company, 0.3M tons
Henan Tianguan company 0.32M tons
Anhui Fengyuan company 0.32M tons
Heilongjiang Huarun ethanol company 0.1M tons
The first pilot projects have been extended in four provinces (Jilin,Henan, Heilongjiang, and Anhui) with total capacity of 1.32M tons/ybased on over-stored grain approved
From June 2002 to June 2003, pilot vehicle utilization of ethanol-gasoline mix organized in Henan and Heilongjiang
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Development of bio-ethanolNational pilot projects (2/2)
In 2004, pilots extended to whole Heilongjiang, Jilin, Liaoning,Henan, Anhui, and partial Hebei, Shandong, Jiangsu, Hubei,but low development due to higher price than gasoline
In 2004, global energy crisis and gasoline price raised and 4pilot enterprises increased their capacity
By now, total capacity of these 4 enterprises over 1.5M tons,but falls short from the long term market demand
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Development status for bio-ethanol
No new bio-ethanol projects based on grain will beapproved
Preliminary condition reached for commercialdevelopment of non-food based bio-ethanol technology
Production of 0.3M tons reached by 2007
Smallest production scale considered economical is
county level Capacity of 3000-5000tons/a
Smaller not economical, bigger face problems with raw materialcollection
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Bio-ethanol technologies
At present, enzyme based ethanol production is mainly fromsugariness and starchiness fermentation
Lines for Cellulosic ethanol have been constructed. Cellulosicethanol still in R&D stage and industrial examination. Technology isnot mature enough and has high cost. Today dozens of pilot planttest and or lab researches production on-going.
China has made progress in Cellulosic ethanol R&D. Several largeenterprises have cooperated with research institutes on industrialtechnology R&D and tests, and some pilot plant production lineshave been built.
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Main bottleneck in bio-ethanol
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Main bottleneck in bio ethanol
technology development
The enzyme activity: hemicelluloses is the maincontent of straw and xylose has restriction to theenzyme
Solving this is the key in enhancing thefermentation efficiency
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Bio-ethanol market status
Currently COFCO has close to monopoly inethanol. It benefits from strong control of the rawmaterials and its cost. It also has the investment
capability as well as commercialized technology.
Most enterprises in the industry are stated owned
and have strong market positions and investmentresources
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Summary
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Generally, the bioenergy sector is still in initial stages of development in
China, and few concrete projects are currently planned or announced
However, there is mostly great interest in cooperation
Most projects, though, are currently still not profitable because of: High production costs: high transport costs for raw materials
Immature supporting technologies: limited auxiliary equipment
Lack of carbon tax: key enabler of bioenergy growth in other nations Central and local governments generally support bioenergy development
and have instituted financial support policies (e.g. subsidies, tax breaks,
preferential loans)
Finnish entrants must understand the market perception and readiness
for their specific technologies often differs by geographical area andfield
In some cases, there is need to educate potential customers
General bioenergy observations
Summary
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Biogas systems Amount of biogas plants grows fast with an annual increase of 1000+
90 % of the biogas projects are in medium size with daily output of1000m3/d biogas and total investment below 0,5 M
China has long experience in design and construction of biogas plants
Biogas project contractors can make good returns even today
Plant owners are not doing the plants to gain profits from the plant =>the functioning and efficiency of biogas plants are not fully utilised
Size of investment is the key decision making factor among most project
owners
Construction of biogas plants relies heavily on government subsidies
Situation may change and there are companies in the market focusingon that
Certain Finnish biogas related technology, such as blender and purifying
equipment, can have market in right type of projects88
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Biomass power generation 460 million tons of agricultural and forest residue that can be used
as energy in China.
Straw is the largest raw material resource with 240 million tons; forest resources
160 million tons
General goal for biomass power generation is 30 million kW by 2020
The three main technologies are direct fired power generation, co-
firing and gasification Direct fired: By 2008, there are more than 25 large biomass power generation programs that
have connected with the grid. The total installed capacity is 600 MW
Co-fired: Two large programs, Shandong Shiliquan Power Plant Transform Program and Xiexin
Baoying Biomass Co-fired Program. Seven small thermal power plant mix the biomass
materials, including straw, rice hull, bark, reed and the mud in urban sewage treatment plant.
Gasification: One large program, Gaoyou Biomass Gasification Power Plant, 5.5MW. Anumber of gasification power plants locate in Jiangsu, Fujian, Sanya Hainan, Handan Hebei,
Heilongjiang with the size smaller than 1MW.
National Bio Energy Co is the strongest player in Chinese market
Forest based bioenergy opportunities especially in Inner Mongolia89
Summary
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Biofuel development
Biodiesel consumption is expected to reach 200 thousand tons by 2010and 2 million tons by 2020 (Eleventh Five Years Plan)
Series of biodiesel pilot projects will be constructed by 2010 in Sichuan, Guizhou,
Yunnan, and Hebei provincese.
About 20 market actors and all of them are small scale and no one can dominate
the market trend Most of market actors are private enterprises. Two major players
are Longyan Zhouyue company and Gushan Company Non-food based bio-ethanol consumption targets: 2 million tons by
2010 and 10 million tons by 2020
Currently raw materials used for ethanol is mainly food-based (corn, wheat), potato
(cassava and sweet potato), sweet sorghum stem, sugar cane and agricultural straw,
etc. Target is to limit usage of raw materials competing with food production
Currently COFCO has close to monopoly in ethanol. It benefits from strong control
of the raw materials and its cost. It also has the investment capability as well as
commercialized technology. Most enterprises in the industry are stated owned and
have strong market positions and investment resources
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